Free Silver

Dictionary of American History
COPYRIGHT 2003 The Gale Group Inc.

FREE SILVER

FREE SILVER, the unlimited coinage of silver by the U.S. government for anyone bringing the metal into the U.S. Mint, functioned as an important political slogan in the latter half of the nineteenth century. At that time, social unrest, political ambitions, and vested economic interests combined to cause a powerful push for legislation to increase the money supply.

From 1834 to the early 1870s silver metal had enjoyed a higher market price, in relation to gold, than the 16 to 1 ratio maintained by the U.S. Treasury, so that silver was too valuable to use as coinage. Moreover, European monetary policies varied widely. Continental conditions had long enabled France to retain bimetallism, while powerful Britain was gravitating to the gold standard. The U.S. Treasury hoped to bring the value of the wartime paper dollar—the greenback—up to par by accumulating gold. This left the currency system in disarray. Congress brought some order to the monetary system with a new coinage act in 1873; the rare silver dollar was simply omitted from mention in the act, a piece of absentmindedness that shortly took on the exciting quality of a "crime" against the public welfare.

As the congressional election of 1878 approached, leaders in both major parties strove to keep their faithful from joining third parties of laborites, greenbackers, bimetallists, and groups favoring the free coinage of silver. Several senators were silver mine owners, and the producer lobby was untiring; but the "sound money" administration of President Rutherford B. Hayes would not yield. Consequently, the Bland-Allison Act of 1878 fell far short of free silver. The Treasury was required to buy monthly not less than $2 million but not more than $4 million of silver and to coin it at the 16 to 1 ratio.

As the 1870s closed, good crops helped to cool inflationary ardor, but a mild recession in the early 1880s heated it up again. Republican campaign underwriters, in particular, demanded high tariff increases in silver purchases. The Sherman Silver Purchase Act of 1890 enlarged the government's monthly silver purchases to 4.5 million ounces and stipulated payment for 2 million of those ounces in "Treasury notes" redeemable in "coin" on demand. The act was admirably adapted to draining off the gold supply. Democratic President Grover Cleveland forced Congress to repeal the act in 1893, amidst a serious nationwide depression.

The calls for free silver reached a crescendo in the next three years. Presidential candidate William Jennings Bryan's famous sermon, "You shall not crucify mankind upon a cross of gold!" nourished the debtor's faith in cheap money, the Populist's hope for a fiat currency of paper, and the mine owner's expectation of high silver prices. Alarmed, creditor interests seized hold of the Republican platform. Close to the election of 1896, the weather turned gold standard, improving crop prospects sufficiently to prevent farmer desertion of Republican leadership. Of nearly 14 million votes, silver got about 6.25 million and gold about 7.1 million. Although government subsidy of silver production recurred occasionally in the twentieth century, the Gold Standard Act of 1900 ended free silver as an effective implement of American politics, declaring the gold dollar to be the U.S. standard of value.

BIBLIOGRAPHY

Calomiris, Charles W. "Greenback Resumption and Silver Risk: The Economics and Politics of Monetary Regime Change in the United States, 1862–1900." In Monetary Regimes in Transition. Edited by Michael D. Bordo and Forrest Capie. New York: Cambridge University Press, 1994.

Friedman, Milton, and Anna Jacobson Schwartz. A Monetary History of the United States, 1867–1960. Princeton, N.J.: Princeton University Press, 1963.

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free silver

free silver, in U.S. history, term designating the political movement for the unlimited coinage of silver.

Origins of the Movement

Free silver became a popular issue soon after the Panic of 1873, and it was a major issue in the next quarter century. The hard times of 1873–78 stimulated advocacy of cheap money, and the Greenback party nominated presidential candidates several times and flourished in local elections, especially in 1876 and 1878. The market price of silver fell rapidly after 1873, because of American and European demonetization of silver and because of increases in mine production. Inflationists failed to secure paper-money expansion and turned to silver, believing its free coinage would serve their purpose as well as greenbacks so long as a silver dollar was worth intrinsically less than a gold dollar. Silver-mining interests also wanted silver coinage to aid their business.

Political Ferment and Legislative Compromise

The demands for unlimited silver coinage led to the passage (1878) of a compromise measure, the Bland-Allison Act, over President Hayes's veto. The act provided for definitely limited coinage at a ratio of 16 to 1 with gold, but its provisions were insufficient to halt the decline of silver prices, or to increase the circulation of money. Meanwhile, sectional lines over money were becoming sharply drawn. The financial interests in the East favored sound money and the gold standard. The indebted agrarian classes of the South and West demanded inflation, to ease debt burdens in the face of falling prices of farm products. Their demands were reinforced by Western silver-mining interests.

As the prosperity of the early 1880s vanished, demands arose again for free silver. By 1890 the political strength of the silver advocates, especially in the West, was so great that the Sherman Silver Purchase Act, another compromise, was passed, to replace the Bland-Allison Act and to provide for increased government purchases of silver. The West's discontent was further emphasized by the rise of the Populist party, with demands including free silver. The silver advocates were no longer content with compromise measures and were displeased by the 1892 presidential candidacy of Grover Cleveland, a supporter of the gold standard. Many silver Democrats deserted Cleveland to support James B. Weaver, the Populist candidate. This coalition of silverites and Populists was able to gain control of half a dozen Western states.

Advocates of free silver were enraged when the Panic of 1893 brought repeal of the Sherman Silver Purchase Act. By the middle of his second term, Cleveland's Western and Southern opponents had captured the Democratic party. Publication of Coin's Financial School, by William Hope Harvey (1894), made many converts to free silver by presenting the complicated money question in easily understood terms.

Decline of the Movement

In 1896 free silver became the major issue of a presidential campaign when William Jennings Bryan made it the chief plank of his platform. McKinley's victory over Bryan then and again in 1900, coupled with increased gold supplies and returning prosperity, minimized free silver as a political issue. Yet the silver bloc, partly inspired by Nevada silver interests, continued to be active and secured legislation mandating heavy U.S. Treasury purchases of silver under Franklin Delano Roosevelt. The decreasing supply of silver in the 1960s led the U.S. Treasury to end its use in coins and to sell its surplus stock of silver in 1970.

Bibliography

See A. B. Hepburn, History of Coinage and Currency in the United States (1924, repr. 1967); D. R. Dewey, Financial History of the United States (12th ed. 1934, repr. 1968); M. Leech, In the Days of McKinley (1959).

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Free Silver

Gale Encyclopedia of U.S. Economic History
COPYRIGHT 2000 The Gale Group Inc.

FREE SILVER

A U.S. political movement of the late 1800s, "Free Silver" advocates argued for unlimited government coinage of silver. Like members of the Green-back Party, Free Silver supporters included many farmers who, in the 1870s, found themselves in debt from the effects of a drop in farm prices and an increase in costs. The agrarians were joined in their fight by silver mining interests in the West and members of the People's (Populist) and Democratic parties. "Silverites" believed the government purchase and coinage of silver would have an inflationary effect which would raise prices and put more money in circulation thereby allowing debts to be paid. In 1878 Congress passed a compromise to appease the Free Silver alliance: The Bland-Allison Act required the U.S. Treasury to buy silver bullion and coin in the amount of two to four-million dollars worth each month. Nonetheless the Free Silver forces continued lobbying for an unlimited coinage of silver.

Though they were opposed by gold-standard interests, mostly creditors who were opposed to any silver coinage, silver supporters got another boost. In 1890 Congress passed the Sherman Silver Purchase Act which doubled government purchase of silver to increase the money in circulation. The legislation back-fired: The resumption of silver as a monetary standard increased the overproduction in western silver mines; thus, prices collapsed. Americans responded by trading their silver for gold dollars thereby draining federal reserves. In 1893 the Sherman Silver Purchase Act was repealed and the United States returned to the gold standard. The presidential election of 1896, which pitted Republican candidate William McKinley (1897–1901) against Democrat William Jennings Bryan (1860–1925) was dominated by the debate over Free Silver. The silverite candidate, Bryan, lost. An increase in the world supply of gold and a return to prosperity made the silver issue moot for the next three decades: Gold remained the monetary standard until 1933.

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